Wednesday, December 19, 2012

Merry Christmas, Taxpayers! Obama To Dump GM Stock At $12 B Loss

Ho ho ho, has Obama Claus got something for you!

Back when President Obama was pounding his chest about his wonderful success with the GM bailout, I never could figure out why a sharp businessman like Mitt Romney chose not to reveal the truth to the voters.

The GM bailout was only designed to do one thing - pay back the president's union supporters and campaign contributors at taxpayer expense, Chicago-style. It amounted to wiping out GM's private equity holders,many of them elderly retirees and gifting the company to the unions.

The cost? Oh before today's announcement, something like $88 billion in taxpayer funds.

The GM stock the feds were holding was put up for sale in the initial public offering which was supposed to recoup our initial $50 billion 'investment' was supposed to start out at $36 per share, around where the stock traded shortly after the offering hit the market. Instead, it tanked and the losses alone on the devalued stock the feds got stuck with came to over $16.6 billion...not counting the $26.4 billion in direct aid that's never been recouped.

About half of the stock is going to be sold back to GM's union owners for $5.5 billion. And that's not all, the union is getting a price of $27.50 per share, about 8 percent higher than GM’s closing price yesterday,when the deal was signed. The Feds are going to try to sell the rest of it at any price they can get over the next 15 months or so. The cost to the taxpayers? An estimated $12 billion.

That brings the cost of the GM bailout to a nice $100 billion or so, give or take.The linked Examiner article doesn't count the tax break and thus severely understates what the GM bailout actually cost.